State Republicans Ready With Deficit-Cutting Ideas

OTHER OPINION

Just a few months into the fiscal year, Connecticut again faces a fiscal calamity. Recent estimates put the state's deficit at $415 million, a situation that was predictable and avoidable.

Gov. Dannel P. Malloy, using his authority to make cuts of up to 5 percent within state agencies, has attempted to tackle less than one-third of the problem.

If we are serious about straightening out the state's finances, there must be genuine bipartisan discussions when the General Assembly convenes in a special session this month. Republicans look forward to working with Gov. Malloy and the legislative Democrats to find a solution.

After foisting the largest tax increases in state history on everyone who consumes goods and services in Connecticut in 2011, the governor and the majority party Democrats pronounced the fiscal mess cured. That was not the case. Worse news awaits when the legislature opens the regular session in January. Budget experts project that over the next two years the deficit will balloon to $2.2 billion.

We are back where we started. The deficit was predictable largely because of two factors:

First, anticipated revenues are off in virtually every category, from personal income to sales and corporate taxes. Raising taxes during a recession was a bad idea.

And second, the spending side of the budget was never cut or even remotely curtailed. State spending in the fiscal year ending June 30 will be up by $1.4 billion, or 7.2 percent, over the previous year if no adjustments are made.

The governor insists he has "no intention'' of raising taxes "this year.'' We will take him at his word, but that leaves one option — spending cuts. The no-layoff agreement he made with state employee unions prevents significant adjustments to personnel, the largest portion of any budget.

Republicans are ready to make the tough decisions that many of us believe are long overdue. We offered an alternative Republican budget with no tax increases again last year but were overruled.

Our proposals to privatize parts of state government remain viable. Our budget contained $224 million in Medicaid cuts through enhanced fraud detection, which should be on the table. Elimination of longevity payments, at least for non-union workers, ought to be a consideration as well as getting rid of the Citizen Election Fund as we previously proposed.

Solutions to fiscal woes can prove fleeting. Connecticut faced an $8 billion deficit in 2009 that was erased on paper — fortified by creative accounting, suspect forecasting and other tactics that would never be tolerated if accounting firms ran the books. Just 15 months later, a $3 billion deficit turned up. Democrats took care of that with the big tax hikes.

The last fiscal year ended with Connecticut's books "balanced.'' Unfortunately, that too was only achieved on paper because hundreds of millions dollars set aside to pay down the state's massive debt were diverted at the last minute to cover operating expenses. That "balance'' quickly vanished. Revenue lagged during the summer and fall while spending rolled on unabated.

At a recent hearing, the governor's budget chief said the prospect of higher federal taxes next year on capital gains would prompt investors to empty their portfolios before Dec. 31, creating a windfall for Connecticut. That is not a fiscal strategy. It is a sad comment on how we budget for revenue and expenses.

Connecticut cannot afford any more budgetary sleight of hand. More borrowing to stanch the red ink will not fly with the financial markets that rate our credit. Connecticut endured a credit downgrade last January and no doubt market analysts will pay close attention to what actions we take over the next month.

Connecticut still has its share of wealthy residents. But recent reports showed that the state has taken in less than anticipated revenue from high earners. Are we reaching a tipping point of diminishing tax returns from those who create wealth and jobs?

I am hopeful we can reach a bipartisan and lasting agreement. The Malloy administration inherited a huge deficit when the governor took office in 2011. But not a single Republican voted for the current budget and our proposed solutions were dismissed outright.